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TMI Blog2022 (1) TMI 1296X X X X Extracts X X X X X X X X Extracts X X X X ..... san Khan, Shyam Sunder Chaurasia, M/s Singhal Agencies, Ravindra Kumar, Gopal Chaurasia, Ashok Kumar Jain, Waziruddin, Sushil Kumar Gupta, Prashant Agarwal, M/s New Vikas Goods Carrier, M/s Shiva Group of Agencies, Subhash Mishra, Uma Shanker Awasthi, M/s Kanchan Udyog, M/s Trimurti Roadlines, Ms Gopinath Sahu, M/s Hari Om Khadi Gramodyog Sansthan, Pawan Kumar Agarwal, M/s Naseemuddin and Sons, Shri Rajesh Agarwal, G N Chaudhary, Atal Behari Bajpai, Samar Bahadur Singh, Shiv Prakash Trivedi, Ram Kumar Sharma, M/s Keyman Laminators Pvt Ltd, Surya Kumar, M/s Bihar Carrying Company P. Ltd, M/s Abhishek Sales, Jayan Kumar Versus Commissioner of Central Excise, Kanpur. HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) For the Appellant : Shri Hari Om Tiwari, Advocate, Shri Amit Awasthi, Advocate & Shri Sandeep Saraogi, Chartered Accountant For the Respondent :Shri Gyanendra Kumar Tripathi, Shri T.M. Siddiqui, Authorised Representatives ORDER ANIL CHOUDHARY: These cross appeals arise from the common order-in-original dated 07.09.2020, whereby four show cause notices have been adjudicated/ disposed of. The main show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1,000,000 23 E/70029/2021- EX[DB] Abhishek Sales, Lucknow - - 1,000,000 24 E/70514/2020- EX[DB] Chetan Enterprise, Patna - - 1,000,000 25 E/70520/2020- EX[DB] Shiv Babu Chaurasia, Bhadoi - - 1,000,000 26 E/70519/2020- EX[DB] Mohan Lal and Sons, Mirzapur - - 1,000,000 27 E/70518/2020- EX[DB] D S Enterprise, Chopan - - 1,000,000 28 E/70523/2020- EX[DB] S K Supply, Gopiganj - - 1,000,000 29 E/70515/2020- EX[DB] Purvanchal General Store, Yusufpur - - 1,000,000 30 E/70086/2021- EX[DB] Kaka Enterprise, Allahabad - - 1,000,000 31 E/70542/2020- EX[DB] Naseemuddin and Sons, Sasaram - - 1,000,000 32 E/70529/2020- EX[DB] Ashok Kumar Jain, Kolkata - - 500,000 33 E/70089/2021- EX[DB] Naseem Ahmed, Bihar Traders, Ranchi - - 500,000 34 E/70524/2020- EX[DB] Nadeem Khan, Poona Zarda, Pune - - 500,000 35 E/70527/2020- EX[DB] Ravindra Kumar, Abhishek Sales, Lucknow - - 500,000 36 E/70528/2020- EX[DB] Gopal Chaurasia, Mohan Lal and Sons, Mirzapur - - 500,000 37 E/70525/2020- EX[DB] Shyam Sunder Chaurasia, D. S Enterrpise, Chopan - - 500,000 38 E/70530/2020- EX[DB] Waziruddin, Naseem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises 340,019.00 200,000.00 340,019.00 8 E/70026/2021- EX[DB] Keyman Laminators 8,501.00 12,000.00 8,501.00 9 E/70028/2021- EX[DB] Bihar Carrying Co. - - 500,000.00 2. The appeals of the other appellants (arising from common impugned order) were also heard together along with the appeals of the Revenue, and are being disposed of by this common order. 3. On intelligence that the aforementioned main appellants(s) were involved in the manufacture of "Sir Brand‟ Pan Masala and Gutka, and have resorted to clandestine clearance to evade central excise duty, search was conducted in the premises along with others on 01.12.2007. A second search was also conducted at the factory premises on 9.5.2008. In the search, several documents, and the raw materials as well as finished goods were seized. Some finished goods were lying at the premises of the dealers/distributors, and those lying at the premises of the transporters/Railway were also seized. It also appeared to Revenue that such goods (seized in premises of transporters, dealers) were cleared without payment of duty. It also appeared to Revenue that there was shortage of cenvatable inputs being used in the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3394.56 Kgs. (96 bags). Rs.1/- 1684800/- 572664/- 9 09.05.08 Chaar Bagh, Railway Station, Lucknow Sir Gold finest Gutkha -7441.20 kgs. (212 bags) Rs.1/ 3720600/- 1264632/- 10 09.05.08 Kanpur Railway Station Sir Current Gutkha 632.06 kgs. (17 bags) Rs.1/ 316030/- 107419/- 11 10.05.08 Jodhpur Railway Station Sir Current Gutkha 3271.84 kgs. (88 bags) Rs.1/ 1635920/- 556049/- 4. During the course of stock taking in the factory premises of M/s Raghunath International Ltd., (RIL) on 1.12.2007, various raw materials were found valued at Rs.18,80,873/-. In absence of stock register or proper records, the raw materials appeared liable for confiscation and as such, were detained. The Supervisor stated that after closure of the production (since Oct., 2007), in RIL, they were only doing betel nut cutting work, on job work basis for M/s Seema Enterprises. The detained goods were seized vide seizure memo dated 3.4.2008. 5. During the search at M/s Shankar Enterprises on 9.5.2008, physical stock was taken in presence of Mr. Sunil Gupta, Clerk of the factory, wherein the finished goods of "Sir Brand‟ Gutka and raw materials were found over and above the quantity a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the factory premises of "Key Man Laminators Pvt. Ltd.‟, Cooperative Industrial Estate, Kanpur. Further, stated he was not given any invoice or bills by the Supervisor - Mr. Ajay Singh. Upon enquiry from the said Ajay Singh and Shri Sushil Gupta-Director of M/s. Key Man Laminators, they admitted in their statement dated 9.5.2008, that the said goods were manufactured in their factory and were cleared without any supporting invoice. Accordingly, the said consignment of 400 kgs. printed rolls were seized on 9.5.2008. The said tempo No.UP78AN4563, valued at Rs.30,000/- (thirty thousand) was also liable to confiscation, and it was also seized. 8. Transporter - Bihar Carrying Co. (P) Ltd. On 9.5.2008, the search was also made at the premises of the transporter- M/s Bihar Carrying Co. Pvt. Ltd. (BCC), Transport Nagar, Kanpur 96 bags of "Sir Brand‟ Gutka were found for which the Manager of Transport, Mr. U. S. Awasthi could not provide copy of the bills/invoice pertaining to the same. On verification of the name of the manufacturer-as printed on the pouches, it appeared that 57 bags of "Sir Brand Gold Silk‟ were manufactured by M/s Seema Enterprises and 39 bags w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma : Rs. 6,80,35,608/- and M/s. Shankar : Rs.1,80,28,296/-]. 12. Transportation Made by M/s Trimurti Roadlines, 109/369, R.K. Nagar, GT Road, Kanpur. The GRs/ Bilties issued by M/s Trimurti Roadlines, Kanpur for transportation of Sir Brand Gutkha/ Pan Masala during the year 2005-06 to 2008-09 (up to 07.05.2008) were identified. The identification and quantification of Sir brand Gutkha transported by M/s Trimurti Roadlines, Kanpur was made on the basis of 'the capacity of trucks used for transportation, destination, and variety of Sir brand Gutkha/ Pan Masala, as emerged from the statements of Shri Alok Krishan Gupta and various dealers of U.P. Accordingly, Charts were prepared which quantified that M/s Trimurti Roadlines, Kanpur had transported 49,420 bags of Sir Brand Gutkha/ Pan Masala during the period from April'2005 to March'2008, which were cleared clandestinely without issuing bills, involving Central Excise duty to the tune of Rs.17,88,74,208/-[M/s RIL: Rs.13,40,29,548/- and M/s Seema: Rs. 4,48,44,660/-] 13. Estimated evasion of duty on purchase of unaccounted (input)Outer Pouch Laminates from M/s. Vinayak Ultraflex, Kanpur. Investigations further revealed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Railways during the period September' 2004 to May' 2008 (upto 07.05.2008), and nature of packing adopted by them from time to time, and as deposed by different concerned persons in their statements, a Chart was prepared, which indicated the total duty evaded by M/s.RIL, M/s Seema and M/s Shanker on 44410 bags of Sir Brand Gutkha/ Pan Masala transported through Railways was Rs.33,18,54,918/- [M/s RIL: Rs. 29,31,43,072/-, M/s Seema: Rs. 3,28,63,367/- and M/s Shanker: Rs. 58,48,479]. 17. Accordingly, show cause notices were issued. Show cause notice dated 1.10.2009 was issued proposing of demand central excise duty as mentioned below for alleged manufacture and removal of Pan Masala and Gutkha, clandestinely removed during the period September, 2004 to May, 2008. Name of the Party Duty Demand proposed (Rs.) Raghunath International Limited (RIL) Rs.71,91,56,761/- Seema Enterprises (Proprietor) Seema Agarwal Rs.19,15,67,587/- Shankar Enterprises (Proprietor) Uma Shankar Yadav Rs.07,87,77,796/- Total Rs.98,95,02,144/- 18. Further, demand of Rs.1,36,668/- and Rs.28,090/- was proposed on dutiable inputs being laminates (packaging materials) found short in the facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner has in the impugned order confirmed demand of duty for only the part amounting to Rs. 2,88,15,226/- ,in respect of 4795 number of bags Gutkha/ Pan Masala allegedly transported in guise of Kachri Papad by M/s Bihar Carrying Co. during Feb 2008 to April 2008. Count B(ii) - Clandestine removal of goods (Sir Brand Gutkha/ Pan Masala) allegedly transported through Road Transport Co. namely M/s New Vikas Goods Carrier, Kanpur. Total duty demanded: Rs. 29,78,41,226/-, quantified on the basis of 50,000 bags allegedly cleared clandestinely and transported to the various destinations. Demand confirmed = NIL. Respondent Commissioner has found the aforesaid demand to be legally unsustainable. Count B(iii) - Clandestine removal of goods (Sir Brand Gutkha/ Pan Masala) allegedly transported through Road Transport Co. namely M/s Trimurti Roadlines. Total Duty demanded Rs. 17,88,74,208/- quantified on the basis of 49420 bags allegedly cleared clandestinely during April 2005 to March 2008. Amount of Demand confirmed in the impugned order, same as demanded in the SCNi:eRs.17,88,74,208/-. Count C - Demand of Rs. 5,36,99,135/- on M/s Shankar, raised in the SCN in respect of 15,79,85, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as wrongly claimed to have been made available by the Railway Authorities and further claimed to have been shown to Shri Dilip Kumar Gupta, Railway booking agent, while recording his statement dated 24.09.2008, and obtaining his confirmation to the correctness of the chart (Annexure 9), as prepared and shown to him itself shows and proves that Shri Dilip Kumar Gupta was compelled to write a tutored statement containing factual errors, as neither 2993 or 2999 RRs along with their forwarding notes were shown to him, nor there did actually exist 2993 RRs/ Forwarding Notes, as there existed only 2583 RRs/ Forwarding Notes (after correctly calculating the total number of RRs/ Forwarding Notes listed in the chart marked as Annexure 9 to the SCN). 24.4 Out of 2583 RRs/ FNs, the Respondent Commissioner has excluded a total of 1566 entries (Table A1 of the impugned order) on account of non -fulfillment of criterion of handwriting, 09 entries on account of non-fulfillment of criterion of "Description" and 03 entries on account of non-fulfillment of criterion of "weight". Thus, the Respondent Commissioner has confirmed the demand of duty in respect of 1005 RRs which works out to Rs. 13,69, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Appellant‟s through independent and directly affirmative documentary evidence with requisite supporting corroborative evidence. 26.2 The Respondent Commissioner has recorded no observation and findings on the contention of the Appellants that there exists absolutely no documentary evidence whatsoever to establish any link between the relied upon xerox copies of RRs/ FNs and the Appellants, nor their exist any documentary evidence to establish the movement of finished goods from the factory premises of the Appellants to the Railway Station. It is an undisputable fact that there was no resumption of any incriminating transport document such as RRs/ FN or any such document (supporting the case of revenue) from the premises of the Appellants. Further, there was also no recovery whatsoever of any kind of incriminating documents from the possession of the Appellants or the employees at the time of searches conducted twice at their office and factory premises to establish any link with the relied upon RRs/ FNs. 26.3 The said third party documents (RRs/FNs) are utterly inadequate to constitute requisite proof to establish such grave and serious charges as suppression of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh documentary evidence on record to prove the duty evasion committed by the party by transporting clandestinely cleared Sir Brand Gutkha/ Pan Masala to various cities by Railways". However, it is amply evident on perusal of the entire documentary evidence relied upon in the SCN that apart from the dubiously procured Xerox copies of Railway Receipts and the Forwarding Notes, there is not even a shred of documentary evidence relied upon to establish any link between the Appellants and identified Railway Receipts allegedly used for transporting of Sir Brand Gutkha/ Pan Masala. 26.6 None of the Railway Receipts or the corresponding Forwarding Notes recovered in relation to the seized goods anywhere indicate the name of the Appellants or any of their employees as either the consignor or consignee. No enquiries were conducted and no material evidence was gathered by investigating officers to establish that the seized consignments were actually removed from the factory of the Appellants to the Railway Stations by or on behalf of the Appellants. 26.7 The Respondent Commissioner has completely overlooked the fact that none of the Railway Booking Agents or any of their employees or any te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (All.) 27. It is further urged that the appellant has sold the goods ex-factory gate at ex-factory price. On the issue regarding Inadmissibility and irrelevance of transport documents such as RRs/ FNs in view of all sales being ex-factory gate exclusively at ex-factory price. 27.1 The Respondent Commissioner has failed to give due consideration and has recorded no specific finding on the Appellants contention, that that it is an incontrovertible fact that the Appellants have always sold their finished goods ex-factory gate at ex-factory price. There does not arise therefore any question of the Appellants having made any arrangements for transportation of goods from the factory premises to the railway station and thereafter for booking of the consignments for onward-transmission to various destinations through Railways. Once the goods are sold at the factory gate, it is the buyers who have always made their own arrangements for lifting the consignments at the factory gate and onward movement to their respective business premises located either within the same city of Kanpur or elsewhere. 27.2 There exists absolutely no documentary, or otherwise reliable oral evidence to prove t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque. 27.6 Since the title as to the ownership to the goods passes on to the buyers at the factory gate itself, the Appellants had therefore absolutely no concern with the arrangements made by the buyers for transportation of the sold goods from the factory gate, to their premises, whether located within the same city or outside in any other city/state. The investigating officers had further overlooked and disregarded the fact that the Appellants had absolutely no concern with the payments said to have admittedly been received by Shri Binda Tiwari, Railway Booking Agent, from one Shri Alok Krishna Gupta or the payments admitted to have been received by Shri Dilip Kumar Gupta or Jitendra Kumar Rathore through Shri Binda Tiwari, at the behest of Shri Alok Krishna Gupta. Shri Alok Krishna Gupta is no doubt a wholesale dealer who is having an independent Company by the name of M/s Bee Gee Project (India) Pvt. Ltd., to whom the Appellants have sold their goods as one of their dealers. However, all the goods sold by the Appellants to Shri Alok Krishna Gupta or M/s Bee Gee Projects (India) Pvt. Ltd., and others had always and invariably been sold under properly issued bills/invoices and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned as to how the Railways identified and segregated the alleged 2995 RRs as relatable to the appellant /manufacturers. Ld. Commissioner has erred in observing that it is immaterial to discuss and ponder over as to how and who carried out the segregation part of RRs and Forwarding Note and on the basis of which criteria. 29. The appellant further urges that the criteria adopted by investigation for segregation of railway receipts, allegedly relating to the appellant is flaunt, without any logical reasoning and highly speculative. At the same time, it is based on the assumptions and presumptions only supported by the statement of some of the persons, who all have retracted their statements in the cross examinations. Such persons have categorically stated that the statement given earlier at the time of investigation was under coercion and undue influence and such statements are not reliable. It is urged that the respondent-Commissioner appreciating the defects in the investigation and lack of proper identification norms have been pleased to discard almost 51% or more of the "railway receipts‟ but have erred in upholding the demand with respect to the 1005 railway receipts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted goods at the factory premises and the seizure of few unclaimed consignments (at Railway station) in which Sir Brand Gutka was found at the Railway Station viz. Kanpur, Jodhpur and Jaipur, have given rise to suspicion by the investigation. It is admitted case that the appellant have been selling their goods ex factory. It is the buyer of the goods, who after taking delivery ex factory, arranged for transportation on their own. The allegation on the appellant is on the basis of the statements of Railway Booking Agents and their helpers, who have allegedly identified some of the RRs/FNs to be in their handwriting. But admittedly, there is neither the name of the appellant as consignor or consignee, nor there is mention of any of the finished products manufactured by the appellants in such RRs and FNs. That not a single consignment has been intercepted by the investigation allegedly removed from the factory premises without payment of duty. Admittedly, Kanpur is the city, where there are hundreds of manufacturers of gutka and Pan Masala. Several of them despatch their finished products through Railways. Thus, prima facie, Revenue erred in drawing a general view that these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in the process of making inquiries from Shri J.K. Rathore and Shri Binda on 6.10.2008, so as to form a conclusive view on the correctness etc. of the four-point criteria, to identify the RRs, the officers already had such data and had already taken a conclusive view and prepared a chart, listing out the identified and segregated RRs, much prior to the recording of the statement of D.K. Gupta on 24.09.2008. Thus, evidently the investigation is motivated and based on conjectures and surmises, as on one hand the four-point criteria was disclosed by D.K. Gupta on 24.09.2008, on which date itself or prior, the investigating officers already had a list of 2999 RRs. Thus, evidently the investigation has been done in a pre-meditated manner. Such data compiled by Revenue have been simply got affirmed from the said D.K. Gupta and others under undue influence and coercion, and the same is fit to be discarded. This fact is also evident as it is mentioned in the show cause notice - that the Railway Authorities provided the Xerox copy of 2999 RRs as early as on 12.09.2008 (much before the recording of the statement of Shri D.K. Gupta on 24.09.2008). 33. Opposing the appellant - assessees, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndestine removal was carried for over more than 2 accounting periods in view of the evidences, which have been found in the course of search and investigation from third parties. The fact of clandestine removal has also been admitted by Shri Rajesh Agarwal, Manager and the common Authorised Signatory for all the three manufacturers, who have been associated with the group for the last several years, prior to the date of search. Mr. Rajesh looked after the quality control of raw materials, work related to the tax compliance, general labour issue and other day-to-day administration matters. Further, Mr. Rajesh was directly reporting to Mr Shri Prakash Agarwal, who was the Director in RIL and also the main beneficiary. Further, Shri Rajesh has stated that Shri Alok Krishan Gupta was the sole selling dealer of "Sir Brand Gutka/Pan Masala‟ for the entire State of Uttar Pradesh. It was Shri Alok Krishan Gupta, who arranged for transportation through rail and road and looked after the collection of sale proceeds. 33.3 Further, urges that Shri Alok Krishan Gupta, who is the Director in Bee Gee Pvt. Ltd., Kanpur, in his statements dated 30.06.2008 and 17.10.2008 has, inter alia, admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Rajesh Agarwal. Further, on being shown copy of some of the RRs, which were forwarded by the Railway Parcel Office to the Revenue, he accepted that the transportation was done for "Sir Brand Gutka‟ manufactured by the three appellants. 33.5 It is further urged that Shri Dilip Kumar Gupta alias Pappu Mitha in his statement recorded on 4 different dates has stated that he was working as helper at Kanpur Railway Station involved in booking of goods belonging to the various parties for various destinations. He also stated that Shri Binda Tiwari was getting Rs.45/-per bag for the expenses etc. and he was making payment to the persons accompanying the goods in the trains to various destinations viz. @Rs.1,000/- for Howrah, Rs.1,200/- for Jodhpur, Rs.1,900/- for Pune and Rs.2,900/- for Hubly. The expenses for unloading and freight used to be extra. He was getting the instructions from Shri Binda Tiwari and accordingly, he was doing the work. Further, Shri Dilip Kumar Gupta recognized the handwriting of his assistants or associates on the forwarding notes viz. Taukir, Paras Pandit, Vikas, Rakesh, etc. He also agreed with the statement of Shri Bindra Tiwari. He maintained the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes, weight per bag, code used for description of the goods. On seeing the forwarding notes, allegedly received from the Railway Parcel Office by Revenue, he recognized the handwriting of the persons working with him and identified with respect to the description of goods, weight per bag, destination stations, etc. 33.7 It is further urged that aforementioned evidences have been corroborated by the statement(s) of the buying dealers viz. Shri Ashok Kumar Jain, Partner of Bajaj & Sons at Kolkata, who has stated that he used to contact for purchase of gutka with Shri A.K. Gupta and sometimes with Shri Rajesh Agarwal telephonically. He was making cash payment for goods received without bills and vide demand draft or banking channels for the goods received with invoice. The goods booked for them from Kanpur, etc. are never in their names but in the name of some third person and the description on the RRs is mentioned as Zarda, Supari Chura, etc. On being shown the chart of RRs prepared by Revenue for the period Jan. 2007 to 8.5.2008, they stated that they do not have any record of the quantum of "Sir Brand‟ goods received. Similar admission has been made by Shri Anil Singhal, Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andestinely cleared goods prepared on the basis of such forwarding notes and RRs. Further, criteria for identification of the RRs was also suggested by the booking agents, who were involved. Further, evidently, RRs were prepared by the Railways on the basis of the forwarding notes presented to them along with the goods. Ld. Commissioner further observed that Shri Jitendra Kumar Rathore in his statement dated 4.5.2009 has admitted that he was shown the copies of the RRs and their corresponding forwarding notes, which he identified and agreed to the list of 512 RRs prepared on the basis of forwarding notes written by him. Further, preparation of forwarding notes by Shri Jitendra Kumar Rathore has been corroborated by the statement of Shri Dilip Kumar Gupta. 33.11 As regards the objection of the appellants/ manufacturers that the booking agents/persons dispatched various goods to various places including Howrah, Pune, Jodhpur, Kanpur, Jaipur, etc. from Kanpur Railway Station and, therefore, it is absurd to presume that wherever the description of the goods on the RRs is Zarda, Zarda-Gutka, Sweet Supari, Mouth freshner till May, 2007 and thereafter, supari, supari chura, supari mix, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring on as many as 1945 forwarding notes has not at all been verified on the criteria of similarity of handwriting etc. Since there is no verification nor confirmation of handwriting by the persons, who actually prepared the said 1945 forwarding notes, it was held that assertion of the Railway Agent-Shri Dilip Kumar Gupta that he could recognize the handwriting of all such persons, who had left the job, was held to be not reliable. He further observed that the helpers of the Booking Agents viz. Jitendra Kumar Rathore, Paras Tiwari, Taukir Khan, Rakesh Singh and Vikas Kanojia in their statements have admitted to have prepared, after seeing the exact number of forwarding notes, totaling to 1049, out of the total 2993 RRs plus forwarding notes. It was further observed that the persons, who have allegedly prepared the balance 1944 forwarding notes were not examined at any stage. It was further observed that there is nothing on record to indicate the basis of identification of such associates of the Booking Agents. It was accordingly observed by the ld. Commissioner that Revenue has not been able to establish the credibility of 1944 forwarding notes and the corresponding RRs. Ld. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the premises of BCC- Transporter, on the basis of which, identification and segregation was carried out. The ld. Commissioner has observed that the fact of clandestine clearance and transportation by road has also been admitted by Shri Rajesh Agarwal, Authorised Signatory of the three appellants/manufacturers, who has, inter alia, stated that Mr. Sri Prakash Agarwal and Shri Alok Krishan Gupta used to give orders with regard to the quantity of goods for dispatch to a specific party with/without invoice on day-to-day basis. He also stated that Mr. Alok Krishan Gupta used to arrange for the transportation of clandestinely removed goods by road/rail to various buyers. Such statements of Rajesh Agarwal have also been corroborated by the statement of Shri Alok Krishan Gupta. Shri Rajesh Agarwal has also stated that freight for such transportation was paid either by Shri Alok Krishan Gupta or Mr. Shri Prakash Agarwal. Shri Rajesh Agarwal also agreed with the statement of Shri Uma Shankar Awasthi, Depot Manager of BCC at Kanpur. On being shown, the JST slip numbering 1308 resumed from the premises of the BCC office at Tatanagar, Shri Rajesh Agarwal accepted that they have cleared and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods received without invoice. He also admitted that 36 bags of "Sir Brand Gutka/Pan Masala‟ and 14 bags of advertisement materials were seized at the premises of BCC, Tata Nagar, which have arrived from Kanpur under JST Slip No.1308, as he was not having any licit document of such products, he did not claim the ownership of the goods. The ld. Commissioner observed that the allegation of clandestine removal and transportation of the goods by the appellant/manufacturers stands established from the records found in the premises of BCC, which has been corroborated by the statements of the aforementioned various persons. Ld. Commissioner further observed that the allegation of clandestine removal and transportation by BCC is also corroborated from the seizure of "Sir Brand‟ goods at the premises of BCC, both at Tata Nagar and Kanpur respectively. 34.3 Ld. Commissioner further observed that it is admitted by the staff of the BCC that they were transporting clandestinely cleared goods Gutka/Pan Masala of 5 different brands/ manufacturers and were making entries pertaining to all of them in common set of transport records. Further, observed that the investigation has not laid- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further observed that the investigation has considered the goods transported under the description code of "CP goods‟, "C.P.‟, "C. Cloth‟, Cotton Cloth, Cloth, Cotton, HDPE, SG, Tobacco or Footwear are those pertaining to "Sir Brand Gutka/Pan Masala. Hundreds and thousands of entries with the same or similar description and destination codes have not been considered for inclusion in the Annexure, prepared for computation of demand. There is absolutely no factual or logical reason whatsoever to treat the consignment of goods having ambiguous description codes as being those pertaining to "Sir Brand Gutka/Pan Masala‟. Further, the description code deviced for different brand of Gutka/Pan Masala are not unique for a specific brand, and has been most casually and carelessly used. Ld. Commissioner thus, concluded that the records of the transporter -BCC are not reliable for the demand computation as such. Accordingly, the Adjudicating Authority re-computed the demand of duty for the alleged clandestinely cleared goods through BCC, relying on "Goods Manifest‟ and upheld the demand for Rs.2,88,15,226/-(M/s.Seema Rs.2,76,13,340/- and M/s. Shankar Rs.12,01,886 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any of the appellants/manufacturers as consignor/consignee. There is also no mention of the name of the alleged buyer of the goods, alleged to be "Sir Brand Gutka/Pan Masala‟. The investigation has with a pre-meditated mind, listed all such consignments having description of Kachri Papad, having destination Tata Nagar/Ranchi, have presumed to be clandestine removal of "Sir Brand Gutka/Pan Masala, only on the basis of statements. Such statements not being voluntarily or freely given, but being tutored and/or given under duress, are not reliable. Such statements did not stand the test of cross-examination. Further, in absence of any corroboration with the records of the appellant, no demand can be fastened on these appellants, based on the third party records and/or statements. It is further urged that such transporters were transporting "Kachri Papad‟ on behalf of numerous consignors/consignees. Further, BCC was also admittedly transporting Gutka/Pan Masala of various brands belonging to other manufacturers, including for the destination(s) - Ranchi and Tata Nagar. Thus, the whole demand is presumptive and fit to be set aside. 36. TRANSPORTATION BY M/S NEW VIKAS GO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are received on proper bills and they mention the description of the goods in their challan/ builty as gutka / pan masala. It appeared to Revenue, as alleged in the show cause notice, that all entries in the records of the transporter mentioning transport of "pisa bair‟ reflecting 60 or 80 bags, in the parallel lorry challan, pertained to "Sir brand‟ gutka transported without bills by NVGC during the period February, 2005 to April, 2008. 36.3 Considering the explanations and clarifications given by the appellant/ manufacturers, ld. Commissioner have observed that proper and thorough investigation does not appear to have been done with regard to analysis of resumed records, cross verification of the different version made by different persons, in their statement, for arriving at a correct identification criteria, for segregation of various entries with the description "pisa bair‟. Ld. Commissioner further observed that the selection of entries for raising the demand has been done in an arbitrary and inconsistent manner, which is highly erroneous. He noticed that investigation has excluded hundreds of entries showing transportation of pisa bair with various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of Rs.17,88,74,208/- was proposed in the show cause notice. 38.1 It appeared from the resumed records/ documents, being the third copy of GR/ bilty available in the GR books, did not reflect the name of consignor or consignee, description of goods, quantity, number of packages etc. What was reflected was only date, destination, vehicle number, freight and the name of Driver and owner of the vehicle. 38.2 After going through the evidences including the statement recorded and after considering the explanation and the reply of the appellant/ manufacturers, the learned Commissioner observed that the entire chain right from Sh. Rajesh Agarwal, the Authorised Signatory of the three manufacturers, Sh. Alok Krishna Gupta, Director of M/s B.G. Products, sole dealer for U.P., who is also the key person in managing the entire show from the procurement of raw material to sale/ distribution of finished goods, management of transportation and collection of cash as per the direction of Mr. Sri Prakash Agarwal, Sh. Sushil Kumar Gupta, the dispatch Clerk of M/s Seema and M/s Shankar, as well as the persons engaged in transporting the goods, all of them have categorically admitted the modus ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods from their factory premises to the premises of the buyers/ dealers. The entire case of Revenue is based on vague documents recovered from third party. Admittedly, TRL have transported goods for several other manufacturers. In absence of any identification, particularly for co-relating the transporter‟s records with the records of the appellant, the demand confirmed is presumptive and fit to be set aside. It is further urged that the statement was taken at the time of investigation from Md. Salim (person of TRL) and others under duress, in fear of arrest. It is further urged that the charge of clandestine removal cannot be sustained on the basis of documents/ record of the third party in absence of any corroboration with the records of the appellant. There is no iota of evidence that the goods mentioned in the GR/bilty and the day booking register of the transporter, relate to the appellant manufacturers. Such third party records which are full of numerous lacuna and anomalies are unreliable evidence in absence of any corroborative evidence at the end of the appellant / manufacturers. The said record of the transporter relied upon by the Revenue, are neither proper record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g material) found short in physical verification at the time of search. It is alleged on presumption that the quantity found short has been used in clandestine manufacture of gutka/pan masala, and thereafter cleared without issue of invoices and without paying/reversing the amount equivalent to cenvat credit availed. 41.1 The ld. Counsel for the appellants urges that the learned Commissioner have erred in confirming this demand. He further urges that the show cause notice does not disclose as to how the so called shortage of said duty paid inputs was found or discovered. There is no narration as to how the stock verification was carried out and whether any punchnama was drawn in this respect. The SCN only mentions that the search resulted in detection of shortage of duty paid inputs, being used in the manufacture of finished goods. 41.2 As regards M/s Seema, in para-4.1 of the SCN it is stated that in the course of search on 1 December 2007, physical stock verification of finished goods and raw materials in the factory premises was conducted in presence of Shree S.S. Verma - the production supervisor. Finished goods collectively weighing 6106.48 KG was found and 314.65 KG laminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pursuant to investigation it appears that there has been clandestine clearance of 14,346.30 Kg of plain polyfilms by one M/s Vinay Wire & Ploy products Pvt Ltd and 64,4005.90 kg of holographic films, of Sir brand gutka, by M/s Aanand sales to M/s Vinayak Ultraflex Pvt. Ltd., (a manufacturer of laminate/ packing material). Revenue relied upon the statement S.K. Pallival Director of Vinayak Ultraflex, wherein he agreed to the facts stated by Shri Swetanshu Dwivedi Authorised Signatory of M/s Aanand Sales, and admitted that the material mentioned in the computer printouts was received by his unit for manufacturing laminate of Sir Brand Gutka. Mr. S.K. Pallival in the course of recording of statement has submitted a chart, marked as Annexure -11 to show cause notice mentioning therein the month wise details of both accounted and unaccounted purchase of holographic film of Sir Brand from M/s. Aanand Sales and also stated the quantity of laminate manufactured resultantly. It appeared to Revenue that Shri S.K. Pallival admitted to have manufactured a quantity of 1,40,813kg of finished laminate or outer pouches of Sir Brand Gutka, and he cleared the same clandestinely to M/s. Shankar. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Swetanshu Dwivedi have reverted his statement in the cross examination, during the adjudication proceedings, as well as during investigation have retracted his statement, at the very first opportunity. Further, the said CPU was sent for forensic examination by the Revenue to Central Forensic Science Laboratory, Hyderabad. As per the report of the laboratory, there is no existence of alleged data, on the basis of which the recovery of duty was proposed in the SCN. Thus, the adjudicating authority appreciating the interpolation in the panchnama (addition of "CPU‟ later on) and on the basis of the report of the Central Forensic Science Laboratory, Hyderabad found the data wholly unreliable, accordingly, have been pleased to drop the demand. Further, such data is also not reliable in view of non-compliance of the provisions of Section 36B (2) of the Central Excise Act. 42.4 Learned Counsel for the appellant manufacturers supports the findings of the Learned Commissioner on this ground and urges that the proposed demand have been rightly dropped. Contention of Revenue 42.5 Opposing the dropping of this demand, the learned AR for Revenue urges that this demand is mainly bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons put forth before him, as well as the rulings cited. The entire case made out by Revenue is wholly based on unsubstantiated facts and bad in law. All the demands of duty confirmed against these appellants is fit to be dropped and set aside. 43.2 In spite of two searches in the premises of the appellant/ manufacturer no incriminatory evidence was found by Revenue both in the factory premises as well as the residential premises of Director/ Proprietors. Further, admittedly Revenue has not established the manufacture of the huge quantity allegedly removed clandestinely through railway and other transporters. There is no matching on flow back of cash, in tune with the alleged clandestine removal. It is further urged that no reliance can be placed on third party documents in absence of corroboration with the records of the appellant manufacturers. Under the facts and circumstances, the whole demand confirmed against these appellants is based on third party documents and statements. As almost all the statements of various persons did not stand the test of cross-examination. That there is lack of sufficient evidence, and accordingly the demands are fit to be set aside. He further urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not established against the three main appellants/manufactures of Pan Masala Gutka, Accordingly, the penalties imposed on the appellants as well as on all the other appellants are fit to be set aside. 44. Discussions & findings on Demand-cum-Show cause notice issued C. No. V(30)18-Adj/Div-III(/08/1352-57 dated 22.05.2008. Duty Rs. 2,98,262/- on M/s Seema. The Adjudicating Authority found that no evidence with regard to the payment of duty on such goods, at the time of clearance, has been furnished either by the transporter (goods seized with transporter), or owner of the goods or by the manufacturer, i.e. M/s. Seema. Therefore, the Adjudicating Authority held that the seized 5,85,000 pouches of "Sir (Gold)", brand Gutkha manufactured by M/s. Seema, packed in 36 gunny bags valued at Rs.8,77,500/-, already auctioned through NCCF, Ranchi, are liable for confiscation, as per provisions of Rule 25 of Central Excise Rules, 2002 and also held that the Central Excise duty of Rs.2,98,262/- is thus demandable and recoverable from M/s. Seema under Section 11A (1) of the Central Excise Act. 45. Ld. Authorised Representative for the Revenue supports the findings of the ld. Commissioner. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings in respect of Demand-cum-Show Cause Notice issued vide C.No.121/INT/DGCEI/HQ/0 153-4156 Dated 28.05.2008, Duty Rs. 1,60,377/- from M/s Seema Enterprises with penalty on i) RIL Rs. 5,000/- ii) Abhishek Sales Rs. 50,000/- iii) Nath & Co. Varanasi Rs. 1,00,000/-. The Adjudicating Authority observed that the seized goods have been manufactured and cleared in clandestine manner without issuing any invoice and without paying the duty leviable thereon by M/s.Seema. Consequently, the Adjudicating Authority held that the unaccounted finished goods found in excess in the factory premises of M/s. Seema, as well as at the premises of M/s. Abhishekh Sales, Lucknow and Nath & Company, Varanasi are liable for confiscation under the provisions of Rule 25 of the Central Excise Rules, 2002, and the Central Excise duty of Rs.1,60,377/- [Rs.1,04,281/- + Rs.56,095/-] as quantified in the show cause notice is demandable and recoverable from M/s. Seema under Section 11 A(1) of the Central Excise Act, 1944. Since the impugned goods have been manufactured and presumably cleared without payment of duty, the same is demandable from the manufacturer(s) as per the provisions of Section 3 of the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity control test. It is only after the quality control test, that such goods on being found of good quality are finally packed in HDPE bags for dispatch. There is no allegation that such finished goods seized were found packed in HDPE bags, ready for dispatch. Thus, in the facts and circumstances, the provisions of Rule 25 (1)(b) read with Rule 10 of CER 2002 are not attracted and have been wrongly invoked. Further, as Rule 25 (1)(d) has not been invoked in the show cause notice, it clearly establishes that the Revenue was satisfied that there was no intent to evade payment of duty in the facts and circumstances. Accordingly, the penalty imposed under Rule 25(1)(b) is fit to be set aside. 50. Discussion & Findings in respect of Demand-cum-Show Cause Notice issued vide C.No.121/INT/DGCEI/ HQ/07/9033-40 dated 07.11.2008. (Details of demand in para 1, above). 50.1 The Adjudicating Authority held that the unaccounted finished goods found in excess in the factory premises of M/s. Shanker valued at Rs.46,29,130/-are liable for confiscation under the provisions of Rule 25 of the Central Excise Rules, 2002. Consequently, the unaccounted raw materials and packaging materials found in exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records (mainly transporter‟s records) and the statements of the various persons being the staff of the transporters, the authorised persons of the 3 manufacturers, Mr. Alok Krishna Gupta (Dealer/Purchaser), Railway Booking Agent and his associates and some of the buyers/re-sellers of the goods, manufactured by the 3 appellant manufacturers. 52.1 We further find that it is the stand of the 3 appellant manufacturers that they have been selling their goods throughout ex factory, at ex factory price. It is the buyer, who after taking delivery, arranges for the transportation themselves. Under the admitted facts, the 3 appellant manufacturers are neither the consignor nor the consignee, in any of the third party transporter‟s records, including the Railways. 52.2 Almost all the persons, whose statements have been relied upon, have either retracted their statements, which were recorded during investigation and/or the veracity of their statements did not stand the test of cross examination during the adjudication proceedings. The ld. Commissioner has noted in para -50 of the impugned order, that all the respective persons have retracted from the revelation /acceptance made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 Shri Dilip Gupta, (Railway Booking Agent), who, in his statement recorded during investigation, had stated that he was engaged in booking of goods of Sir Brand Gutka/Pan Masala as well as other brands from Kanpur Railway Station. He is the person, who stated the 4 point identification criteria of RRs relating to Sir Brand of Gutka/Pan Masala manufacturers. In his cross examination on 4.1.2017, he has retracted from his original statement stating that at the time of investigation, the statements were recorded under duress and coercion, he had to write as dictated to him by the officers. This fact is also evident from several contradictions in his statement recorded during investigation. In his cross examination, he has also stated that he has no manner of concern with the manufacturers of Sir Brand Gutka/Pan Masala. He was getting instructions for dispatch from Alok Krishan Gupta, who used to pay them for their services. He also stated that he was not aware if any of the goods dispatched through Railways were not duty paid. Further, during cross examination, he could not identify even a single forwarding note, which could be said to have been prepared by himself or his associates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nda Tiwari, whose statement was recorded during cross examination held on 4.1.2017, has stated that his earlier statement was written by one Shri Anand Kumar and another statement by Shri Manoj Kumar Tiwari, and he had merely signed on the dotted line, being under pressure of the officers. He also stated that he could not tell as to which brand of Zarda/Gutka/Pan Masala or any other goods have been booked through the Railways merely by looking at the forwarding notes. After looking at his earlier statements, he has stated that these are not reliable and the same have been recorded as per the dictates of the officers. He also stated that he could not tell the description of the goods merely by looking at the forwarding notes/RRs. It is not possible to say, which brand of gutka/tobacco/pan masala was booked by dispatcher, merely by looking at the forwarding notes and RRs. He also further stated that he does not have any interaction with any driver(s) of Vikram tempo or any other vehicle. He has used the words, "bags of gutka, etc." in his earlier statement under pressure of the officers. He also stated that he has no manner of concern with the manufacturers of the Sir Brand Gutka/Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able and accordingly are set aside. 52.12 So far appeals of Revenue are concerned against the dropping of proposed demand with respect to the alleged transportation of Sir Brand goods through New Vikas Goods Carrier Co., we find that the ld. Commissioner has rightly held that there is no substantial evidence corroborating the allegations in the show cause notice. The whole demand is based on the hearsay evidence and assumptions and presumptions, which has rightly been dropped in the impugned order. Accordingly, we uphold the findings of the ld. Commissioner and dismiss the grounds of Revenue. 52.13 So far the proposed demand of duty of Rs.5.37 Crores (appox.) is concerned on the allegation of unaccounted receipt of packing materials from M/s Vinayak Ultraflex, having considered the rival contentions, we find that the ld. Commissioner has observed that suspicion howsoever strong cannot be the proof of clandestine removal, in absence of corroborative evidence. It has been held in the impugned order that the basic allegation of receipt of unaccounted inputs by M/s. Vinayak Ultraflex does not stand, particularly in view of the report of the Central Forensic Laboratory, Hyderabad, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of M/s. Seema, for the aforementioned reasons as recorded in para 52.14, are held to be bad and accordingly, we set aside the same. We further observe that the finished goods lying inside the factory are not amenable to seizure, unless the same are found outside the factory or despatched. As per the provisions of the Act and the Rules thereunder, the excisable goods are liable to seizure only after such goods are cleared from the factory i.e. outside the factory premises, if found, have been removed without payment of duty. We also hold that there is no provisions for seizure and/ or confiscation of the raw materials lying inside the factory premises. 52.17 Shri Rajesh Agarwal, Authorised Signatory of the three appellant manufacturers in his cross examination on 07.02.2017 stated that the three appellant manufacturers were selling their finished goods at ex factory gate at ex factory price. The manufacturers of Sir Brand Gutka were not undertaking or arranging any transport of the finished goods. He also asserted that in spite of repeated visits of the investigating officers, no incriminating documents or unexplained cash was found. He further stated that his earlier sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring investigation was under pressure exerted by the officers. 52.20 We also set aside the seizure and confiscation of the goods seized at the premises of the transporters, being 39 bags in the premises of M/s Bihar Carrying Co., 212 bags at Lucknow Railway Station, 17 bags at Kanpur Railway Station and 88 bags at Jodhpur Railway Station, as such goods have not been claimed by the manufacturer - appellant, nor they are either consignor or consignee. The contention of the appellants that they have sold and cleared at factory gate, is not found untrue. Accordingly, the demand of Rs.2,16,745/- is set aside on M/s. Shankar along with fine and penalty. 53.21 Shri Subhash Kumar Mishra, Manager of NVGC, Kanpur in his cross-examination held on 07.02.2017 retracted from his earlier statement recorded during investigation, as being in voluntary or obtained under duress. In the adjudication proceeding he was examined by the Adjudicating Authority and he was questioned, if he had filed any retraction or any application with any Authority, bringing the facts to the notice that investigating Officer has exerted undue pressure or duress on him while recording his statement. In reply he stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke rickshaws, trolly/ thelas, etc. 54.26 Thus, from the aforementioned facts and circumstances emerging in the cross examination of the various key persons, whose statements have been relied upon, we are satisfied that in view of the facts emerging in the cross examination, the statements recorded during investigation are not reliable, being involuntary. It is, thus, established beyond any doubt that none of the oral statements obtained during investigation and relied upon documents (third party) can be given any credence or evidentiary value as the same have been found to be involuntary or tutored statements tendered under undue influence/duress/coercion exerted by the investigating officers. We also find that save and except the statements, there is absence of any substantial evidence to corroborate the third party evidences. Such oral evidences are not sufficient for confirmation of the charge of clandestine removal in absence of any corroboration, by way of some documentary evidence of the appellant - manufacturers. 54.27 Similarly, the demand of Rs.3,40,019/- is set aside being on account of the goods seized in the premises of the transporters and traders. 54.28 So far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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